BAM and Sammon likely to complete unfinished schools in Ireland

Work on schools stalled following collapse of Carillion in UK, which forced Sammon into examinership

Kildare-based builder BAM is likely to win the contract to complete five schools left unfinished by the collapse of British construction group Carillion.

The UK operator's recent insolvency stalled work on five schools and an institute of education in counties Carlow, Meath, Wexford and Wicklow.

Inspired Spaces, owned by Carillion and Dutch Infrastructure Fund (DIF), originally won the €100 million schools contract from the State. It hired Irish group Sammon Contracting through another Carillion subsidiary to build them, a deal that ended on the UK group's liquidation.

DIF sought bids this month to finish the schools and it appears that BAM may win this contract, but has told the Dutch company that it will hire Sammon to do the work, which is scheduled to be completed by September.

Several bids

Lawyers for Sammon referred to the possible deal with BAM as the High Court confirmed the appointment of Grant Thornton managing partner Michael McAteer as examiner to three Sammon group companies on Monday. He was appointed on an interim basis early this month.

BAM declined to comment. A spokesman for DIF said the Dutch investor was still analysing several bids it received to complete work on the schools.

Industry figures said it would make sense for BAM to involve Sammon, as that company has already done most of the work.

The court heard that developer PJ McGrath of the McGrath Group would back the rescue of Sammon, which was forced to seek High Court protection from its creditors after Carillion’s collapse left it unable to pay its debts.

Cash flow

Carillion owes Sammon €8 million, which the Irish group does not expect to recover. The UK business had been paying the company every month and its collapse left Sammon without vital cashflow.

McGrath has taken over a €3.35 million loan to Sammon from Ulster Bank, and has provided €560,000 so the company can pay workers, suppliers and subcontractors.

Mr McAteer will have up to three months to formulate a rescue plan for Sammon. This could involve McGrath taking a stake in the group.

Survival chance

Sammon is working on a number of projects in Dublin, Cork and Waterford while it is bidding for contracts with a total value of €90 million. It employs more than 200 people.

Mr McAteer’s report indicated that he believes the business has a reasonable chance of survival.

No creditors objected to Sammon being placed into examinership. The High Court ordered that the three companies, Sammon Contracting Group, Sammon Contracting Ireland and Míceal Sammon Woodcraft file returns to the Revenue and pay all taxes due on time.

A report by independent accountant Thomas McDonald of JPA Benson Lawlor shows it owes Revenue €801,500.

The money is due for the two months after Carillion’s collapse in January. Up to that point, Sammon was fully up to date on its taxes.

Examinership is a court-supervised rescue mechanism for companies that are insolvent or close to it, but can demonstrate they have a reasonable prospect of survival.

The businesses continue trading while they are in examinership and under High Court protection. Creditors cannot enforce debts due before the examiner’s appointment.